Outlook for Net Formation of Businesses

Sir, in the first nine months of 2019, the total net formation of business entities in the economy was around 9,900. This is about a quarter lower than the average of around 13,800 recorded over the same period between 2014 and 2018.

Most sectors saw a fall in the net formation of business entities during this period, including the transportation and storage, business services and construction sectors. Heightened economic uncertainties in the global economy and the resulting slowdown in the Singapore economy are likely to be factors contributing to this trend. MTI expects the net formation of businesses to remain subdued for the rest of 2019.

MTI has several strategies to develop a vibrant eco-system for business. First, we are looking at ways to grow our economy and enable companies to seize new opportunities, both locally and overseas. This includes transforming our industries, developing new sectors such as agri-tech and precision medicine, and supporting our companies to tap on external growth opportunities.

Second, we are fostering a pro-enterprise environment by lowering the barriers of entry and exit for businesses. For instance, MTI launched the GoBusiness Licensing portal for food services on 31 October, which reduces the number of regulatory touch-points for businesses from 14 to one and the number of data fields required from more than 800 to below 100. Businesses can also benefit from lower licence fees and quicker processing time. We will extend this to other sectors, such as retail and environmental services, so that more businesses can benefit from the rules review and process re-engineering.

Third, we will continue to develop a vibrant startup eco-system. We established Startup SG in 2017 to provide start-ups with access to a wide range of local financial and non-financial support. These include Startup SG Founder, which provides mentorship and start-up capital grants to first-time entrepreneurs with innovative business ideas and Startup SG Network, which connects startup eco-system players.

Sir, Government measures are important, but they are not sufficient. To succeed in our goal of building a vibrant business eco-system, we need a collective effort from business owners, workers and Government to work in partnership to transform our economy and enterprises together.

Mr Speaker, I would like to thank the Senior Minister of State for the comprehensive answers to my question. I only have one supplementary question. In relation to the continued level of "healthy" cessation of businesses, as stated in the last part of my original question, can the Senior Minister of State share whether MTI has any specific level of target in terms of the definition of "healthy" cessation of businesses? In relation to the economic cycle we are facing now, whether there is any good feel of "healthy" cessation of businesses going forward, in taking into particular consideration, the outlook of the economy.

Sir, I think in any economy, whether in good times or in challenging times, we will see firms entering and firms exiting. This is part and parcel of a well functioning economy. What we want is to ensure that, in the end, resources are being channelled into the more productive, more competitive firms. Firms that are able to offer better services, better products, better able to meet customers' needs. So, we do not have targets in terms of what are the levels of firms exiting the economy. But certainly, I think this process of allowing the churn – firms that are not doing well, exiting; firms that are more competitive, more productive, doing better, coming in – so that the resources – land, labour – these resources are then better able to be channelled to the more competitive and more productive companies.

Over time, if we do this well, then the economy will get stronger and stronger, the capabilities in our enterprises will get stronger and our workers will be able to get better jobs.